Venture Capital - Ethiopia

Ethiopia

Highlights

The country in Ethiopia is expected to see the Total Capital Raised in the Venture Capital market market reach US$72.63m by 2024.
In the same year, the Later Stage market is set to dominate the market with a projected market volume of US$65.42m.
In global comparison, the United States will lead in Capital Raised, with US$136.6bn anticipated in 2024.
Ethiopia's Venture Capital market is gaining traction, with a growing number of local startups attracting interest from investors.

Key regions:

Market definitionIn-Scope/Out-of-scopeMarket structureReportsMethodology

The Venture Capital market in Ethiopia is experiencing significant growth and development in recent years.

Customer preferences: Ethiopian entrepreneurs are increasingly seeking venture capital funding to support their innovative business ideas and fuel their growth. This is driven by a growing recognition of the value that venture capital brings, including access to capital, expertise, and networks. Entrepreneurs are also attracted to venture capital funding because it allows them to retain control and ownership of their businesses while still accessing the necessary resources for expansion.

Trends in the market: One of the key trends in the Venture Capital market in Ethiopia is the emergence of local venture capital firms. These firms are specifically focused on investing in Ethiopian startups and are playing a crucial role in supporting the growth of the local entrepreneurial ecosystem. They understand the unique challenges and opportunities in the Ethiopian market and are able to provide tailored support to local entrepreneurs. Another trend in the market is the increasing interest from international venture capital firms. Ethiopia's growing economy and large population make it an attractive destination for venture capital investment. International firms are recognizing the potential for high returns on investment in sectors such as technology, agriculture, and renewable energy. This interest from international investors is further driving the growth of the Venture Capital market in Ethiopia.

Local special circumstances: Ethiopia has a young and vibrant entrepreneurial ecosystem, with a large number of startups and a growing culture of innovation. This is supported by government initiatives to promote entrepreneurship and innovation, including the establishment of incubators and accelerators. These initiatives are creating a conducive environment for startups to thrive and attracting venture capital investment. However, there are also challenges that need to be addressed in order to further develop the Venture Capital market in Ethiopia. These include limited access to early-stage funding, a lack of skilled talent, and limited infrastructure. Addressing these challenges will require collaboration between the government, private sector, and development partners.

Underlying macroeconomic factors: Ethiopia's economy has been growing at a rapid pace in recent years, driven by investments in infrastructure, manufacturing, and services. This strong economic growth is creating opportunities for startups and attracting venture capital investment. Additionally, the government has implemented reforms to improve the business environment and attract foreign direct investment, which is also contributing to the growth of the Venture Capital market. In conclusion, the Venture Capital market in Ethiopia is experiencing significant growth and development, driven by the increasing demand for funding from local entrepreneurs and the interest from international investors. The emergence of local venture capital firms and government initiatives to support entrepreneurship are further fueling this growth. However, challenges such as limited access to early-stage funding and a lack of skilled talent need to be addressed to fully unlock the potential of the Venture Capital market in Ethiopia.

Data coverage:

Data encompasses B2B and B2C enterprises. Figures are based on the amount of capital raised, the average of deal size and the number of deals.

Modeling approach / Market size:

Market sizes are determined through a combined top-down and bottom-up approach, building on a specific rationale for each market segment. As a basis for evaluating markets, we use data from OECD, annual financial reports of key players, industry reports, third-party reports, publicly available databases, and survey results from primary research (e.g., the Statista Global Consumer Survey). In addition, we use relevant key market indicators and data from country-specific associations, such as GDP, CPI, number of small and medium-sized enterprises (SME), new businesses registered (number) . This data helps us estimate the market size for each country individually.

Forecasts:

In our forecasts, we apply diverse forecasting techniques. The selection of forecasting techniques is based on the behavior of the relevant market. For example, the S-curve function and exponential trend smoothing are well suited for forecasting digital products and services due to the non-linear growth of technology adoption.

Additional notes:

The market is updated twice a year in case market dynamics change. The impact of the COVID-19 pandemic and the Russia-Ukraine war is considered at a country-specific level.